If you own a dental, chiropractic, optometry or veterinary practice, a DSO or private equity group may call before you ever plan to sell. When that call comes, the valuation you are offered depends on a short list of things buyers check in almost every practice.
This guide covers seven of them. For each one you will see what buyers look at, why it moves value, and one practical thing you can do this quarter.
1. Owner production dependence and associate coverage
What buyers look at: How much of the practice's production comes from you personally, and whether associates or other providers already carry a meaningful share of the schedule.
Why it moves value: A buyer is paying for earnings that continue after the deal. If most production walks out the door when you cut back your hours, the buyer has to replace you, and that risk usually shows up as a lower valuation or a longer required commitment from you.
Practices where patients are comfortable seeing more than one provider are easier to underwrite.
This quarter: Pull production by provider for the last 12 months. If you carry most of it, start moving routine procedures and new patient exams to an associate or second provider.
2. Payer and insurance mix
What buyers look at: The split between fee-for-service, private insurance, managed care plans and government programs, plus how concentrated revenue is in any single payer.
Why it moves value: Payer mix affects margins and how predictable collections are. Heavy reliance on one plan or on low reimbursement schedules can leave earnings exposed if fee schedules change.
Veterinary practices are mostly private pay, so buyers there focus more on pricing consistency and client retention than on plan participation.
This quarter: Build a simple table of collections by payer for the last two years. Review whether any plan is pulling down margins without bringing in patients you would otherwise lose.
3. Recurring patient base and active patient retention
What buyers look at: How many active patients you have, how that count is defined, recall or reappointment rates, and how many patients return year after year.
Why it moves value: A loyal, returning patient base is the closest thing a practice has to recurring revenue. Buyers trust future earnings more when the schedule fills itself from existing patients rather than depending on constant new patient flow.
This quarter: Define "active patient" clearly (for example, seen in the last 18 months) and run the report in your practice management system. Then check how many patients are overdue for recall and start a structured reactivation effort.
4. Hygiene or recurring service revenue share
What buyers look at: The share of revenue that comes from scheduled, repeatable care. In dentistry that is often hygiene. In other professions it may be wellness plans, maintenance care, annual exams or contact lens programs.
Why it moves value: Recurring services feed the rest of the practice and are less tied to the owner's personal production. A healthy recurring service line suggests the practice can keep producing after a transition.
This quarter: Track recurring service revenue as its own line each month. Look for open hygiene or wellness slots and fix the scheduling or recall gaps behind them.
5. Clean, normalized financials and add-backs
What buyers look at: Profit and loss statements, tax returns and production reports that agree with each other, plus a clear list of add-backs. Add-backs are owner expenses run through the practice that a new owner would not carry, such as personal vehicles or above-market owner pay.
Why it moves value: Most DSO and private equity offers are built on normalized earnings. Every add-back you can document supports a higher earnings base. Every one you cannot document tends to get thrown out in diligence.
Messy books also slow the process and give a buyer room to renegotiate late.
This quarter: Ask your accountant to prepare a normalized earnings summary with each add-back listed and supported by receipts or statements. Stop running new personal expenses through the practice.
6. Lease terms and transferability
What buyers look at: How many years remain on your lease, renewal options, rent escalations, and whether the lease can be assigned to a new owner. If you own the building, they will look at whether a fair market lease is in place.
Why it moves value: A practice is closely tied to its location. A short lease, no renewal option or a landlord who must approve any transfer creates real risk for a buyer, and that risk can delay a deal or reduce what is offered.
This quarter: Read your lease for term, renewal options and assignment language. If the remaining term is short, start a conversation with your landlord about an extension or renewal option well before a buyer is involved.
7. Staff stability and systems
What buyers look at: Team tenure, turnover, whether key roles like office manager and lead hygienist or technician are filled by people who plan to stay, and whether daily operations run on written systems.
Why it moves value: Patients often stay because of the team they know. Stable staff and documented processes make it more likely the practice keeps running smoothly after ownership changes, which supports the earnings a buyer is paying for.
This quarter: Write down the core workflows for scheduling, billing, insurance follow-up and recall. Talk with your key team members about their plans and what would keep them.
What a DSO or private equity offer typically looks at
Offers from DSOs and private equity groups are usually based on a multiple of normalized earnings, often expressed as EBITDA. The multiple depends on factors like the ones above, along with size, location and growth.
Many offers do not pay everything in cash at closing. Common features include an earnout, where part of the price depends on the practice hitting future targets, and rollover equity, where you keep an ownership stake in the larger group.
Offers also typically include an employment or transition agreement that sets how long you will keep practicing and on what terms.
When you compare offers, look past the headline valuation. Compare how much is paid at closing, what the earnout requires, what the rollover equity is tied to, and what you are committing to after the sale. Review any offer with your own attorney and accountant.
Where to start
You do not need to fix all seven areas at once. Pick the one or two that are weakest in your practice and work on them this quarter, then measure again in three months.
Each improvement makes your practice easier for any buyer to understand, and it also makes the practice stronger to own whether you sell or not.
If you want to see where your own practice stands, there is a free 2-minute survey at valuexus.com/custom-case-study.
Take The 2-Minute Survey: See What Your Business Is Really Worth